The Inflation Reduction Act signed into law in 2023 is going to begin to implement significant changes to Part D Prescription Drug plans for 2025. The law creates sweeping changes in many healthcare related plans and many other industries. You can read about the full extent of the law on The White House’s website at thewhitehouse.gov.
This year it will be more important than ever to review your Part D Prescription Drug Plan coverage and benefits. The plan structure is a major change. In 2024 a Part D Prescription Drug plan had four distinct stages with an $8,000 out-of-pocket maximum calculated in the first three stages.
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Deductible – Plan member pays full cost of drugs until you reach the deductible amount
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Initial Coverage – Plan member pays a copay or coinsurance and the plan pays the rest of the cost for Medicare-covered prescription drugs
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Gap (Donut Hole) – Once the plan and the plan member pay certain amount for covered drugs a temporary limit is placed on drug costs by the plan.
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Catastrophic – Plan member no longer pays anything for Medicare-covered Part D drugs for the rest of the plan year.
In 2025 the plan structure will now be three stages with a $2,000 out-of-pocket maximum.
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Deductible – Plan member pays full cost of drugs until you reach the deductible. May be increased in 2025 versus what the plan member paid in 2024.
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Initial Coverage – Plan member pays a copay or coinsurance and the plan pays the rest of the cost for Medicare-covered prescription drugs until the plan member reaches the $2,000 out-of-pocket maximum.
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Catastrophic – Plan member no longer pays anything for Medicare-covered Part D drugs for the rest of the year.
Plan members will receive plan details soon. The Summary of Benefits will spell out the changes to their plan and new premium requirements. Early indications are that Part D Prescription plans for 2025 will see significantly increased monthly premiums due to the changes. Many carriers have also made the decision to simplify their Part D Plan offerings. Ultimately the law aimed to create more benefits and lower out-of-pocket costs for many members of Medicare. However, it will be important for Medicare plan members to review their new benefits moving forward for 2025. Their plan may be very different in 2025 than it was in 2024.
A plan member can become more educated on the details of the law and how it affects Medicare in 2025 at medicare.gov. Medicare.gov can provide information on different plans available in your area as well. Talking with a certified Medicare agent would also be a great way to learn of all the different Medicare products available to plan members. Original Medicare, Medicare Supplement Plans, Prescription Part D Plans, and Medicare Advantage Plans are all products that can help cover an individual’s healthcare costs. How those plans interact can really determine an individual’s out-of-pocket costs. Do your research or talk to an agent.
Matthew Hatoway Matthew is a second-generation agency owner. Matthew owns Mansfield Insurance Agency in Lawrenceburg. Mansfield Insurance Agency continues to provide best in class options for their clients healthcare, life, property, and liability insurance needs.
